Just because employers are transparent with their compensation philosophy or ranges, it doesn’t always mean they’re equitable in their compensation process, says Andrea Bartlett, director of people operations at Humi.
Pay transparency is the disclosure of certain compensation details by businesses, while pay equity is a process that companies can use to close the compensation gap between groups of employees who do the same work, including female- and male-identifying candidates, she explains, noting it’s important to distinguish between the two policies.
However, pay transparency is a good place to start in achieving pay equity because it reveals to employers and their employees where inconsistencies and human biases lie, adds Bartlett. “These biases are rooted in systemic issues . . . with respect to different genders, races and religious beliefs having more advantage in a country like Canada than others, particularly when it comes to filling leadership roles. Ultimately, these biases do influence decisions and competition.”
Read: Pay transparency could help solve gender, racial wage inequities: experts
While federally regulated organizations are mandated to have a pay equity policy in place, she believes it’s important that other businesses also consider implementing these policies. “Just because [Humi isn’t] federally regulated, doesn’t mean we shouldn’t put a [pay equity] policy and process into place. The questions I ask myself and my team is, what . . . are we not doing and what can we do to close the compensation gap?”
When working toward pay equity, Humi starts with creating consistent career ladders across its business, which includes examining the different career competencies behind each job. “You might have some individuals at the same pay band, but, [for example], one is working in a manufacturing facility in comparison with someone working in an office,” says Bartlett. “In order to create an equitable process in compensation, . . . you need to know if your career ladders match and understand the role competencies, such as whether technical skills are more necessary in one role compared to another and the ratings of each competency.”
She admits the process can be complex and overwhelming because it goes beyond simply posting the salary range of a job description. “Employers need to do the work internally in order to be both equitable . . . and [transparent].”
Read: New pay equity legislation aiming to close gender wage gap
Still, posting salary details in job descriptions signals to potential candidates that an employer isn’t afraid of being transparent in the salary ranges, particularly when it allows existing talent to assess where they are within that range, says Bartlett, adding it also eliminates much of the human bias, as it shows potential employees that all candidates’ qualifications will be treated equally and subject to the same compensation.
It’s also important for employers to know that the process behind achieving pay equity isn’t a stagnant exercise that they’ll do once, she says, noting it’s an ongoing process, much like performance management. She shares the old adage that women are often assessed on past performance, while men tend to be assessed on future potential. “To change this philosophy, organizations have to . . . always [review] not just the competencies but also the jobs they have for a certain class of employees. For instance, how has one role changed over the course of the [coronavirus] pandemic and does the performance management process have to change also?”
Bartlett believes tying executive compensation to pay equity targets can help move the needle. Without a proper incentive, meaningful change toward pay equity won’t occur, she notes. “Removing the human bias is more likely to fail than succeed if it’s not connected to somebody’s key performance indicators, their outcomes and their ability to build this policy and process.”
Read: Canadian women earned 23% less than men in 2020: report